Nigeria has suspended the licence of Dana Air, owner of the plane that crashed on Sunday, killing all 153 people on board and several others in a crowded Lagos suburb.

"We have suspended the entire Dana fleet. They will be grounded for as long as it takes to carry out the necessary investigations into whether they are airworthy," Harold Demuren, the head of the country's civil aviation body said.

The MD-83 jet crash has prompted an outpouring of national anger. The secondhand plane began losing altitude over the congested Agege district seconds after its US and Indian pilots sent an emergency signal to air traffic controllers. Both engines had lost power when the plane plunged into buildings a minute later, officials said.

Dana is considered one of the safest airlines in a crowded domestic market, with tickets sometimes costing double that of cheaper airlines. A fleet of five Dana planes – one of which was grounded for maintenance – had been operating up to nine shuttle flights daily.

Oscar Wilson, director of flight operations, said the plane had no mechanical difficulties on a flight hours before it crashed. "There was nothing wrong with the aircraft," he said.

The US-made plane was 22 years old, despite a ban on flying airlines older than 20 years in Nigeria. While not considered old for airlines, maintenance in the industry isn't always rigorous, an official told the Guardian. Dana has had its licence suspended briefly once since it began operating in 2008.

The Nigerian aviation minister, Stella Oduah, cried as she told reporters an investigation would be launched into the crash, which brings the number of air disasters in Nigeria to 41 in 43 years. While the country's aviation safety record has improved since a torrid year in 2005 saw nine crashes, many remain sceptical about enforcement.

"We didn't need the minister to cry. As far as I can see ministers are playing Russian roulette with people's lives and we have no choice but to fly these planes. So what we need to know is, could this have been avoided, as with many other crashes in the past?" said Ifeoma Audu, whose friend Adamu Bamaiyi, 34, was killed in the crash.

Periodic clean-ups of the industry have weeded out airlines, including several high-profile cases after crashes. But insiders say fuel contamination and poor maintenance are rampant among some airlines.

At least six victims were recovered on the ground. In one case, three siblings under 12 had been sent to run errands. By the time they returned several minutes later, the plane had ploughed into their home, killing their parents.

More than 100 bodies have been pulled from the crash scene, but emergency workers said heavy rainfall and fears of weakened buildings hampered progress. DNA testing would begin on several bodies burnt beyond identification, a spokesperson said.